Hi traders, the USD/JPY is building a larger bullish reversal after hitting the key support zone at 109. The bullish reaction is increasing the chance that price has indeed completed a bearish correction.
The USD/JPY needs to break above the resistance trend lines (red) before a larger bullish breakout can take place. The break would also confirm the potential for a larger reversal and a new uptrend. A break below the support trend line (blue) and the previous bottom, however, could indicate that the bullish price action is only a pullback within the downtrend.
The USD/JPY is unable to move away from the top of wave 1 (pink), which could either indicate a corrective pattern or multiple wave 1-2 patterns. An impulsive breakout is needed to confirm a larger bullish reversal. Price needs to stay above the 100% Fibonacci level of wave 2 vs 1 otherwise the wave 2 (blue) is invalidated.
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Chris Svorcik Elite CurrenSea